COMMUNITY UPDATE

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Navigating businesses through continuing uncertainty requires all members of the top team to pull their weight – execs and non-execs alike. Successful leaders will be curious, open to challenge and willing to try new ways of doing things.

In research carried out at our annual programme of Retreats, there were common areas where leaders repeatedly acknowledged they were falling short. Right across the executive team – from CEOs to CFOs and HRDs – building alignment was highlighted as a priority for improvement. This need was also acknowledged by leaders in Asia.

There were other common concerns too. Chief Execs and CFOs referenced the need to seek inspiration and fresh thinking from outside their businesses. And concerningly, NEDs said the primary reason for the failure of management teams is that people are afraid to challenge.

Here, we look back at some of the articles we’ve written over the year that address these key areas:

Building Strategic Alignment

Having diverse perspectives in a senior leadership team is integral to producing a robust strategy – the tricky part is pulling them all together. CFOs have a major role to play in making this work, but they need to balance being both objective and supportive, while having strong communication skills.

Tim Doubleday, Group CFO of Burger King UK, said that it’s harder to build alignment when you’re facing a challenging political and economic environment. This impacts all leaders, but Finance execs in particular. “Increasing costs, demands to increase productivity, uncertainty around investment – these are the kind of challenges that put more of an emphasis on the CFO’s role,” Tim said. “From a CFO’s perspective, objectivity and balance are what’s needed as undue pessimism will drive tension.”

Agreement needs to be found on contentious issues, particularly between the top executives. Tim explained: “The number one thing for me is that the CEO and CFO are aligned. If they aren’t, you inevitably end up changing one of them because you can’t have those two senior business leaders not agreeing on strategy, as it confuses everyone else."

Stuart Owens, UK FD of Europcar Mobility Group, agreed: “The key is a balance where the CEO and CFO have a very good relationship, so when the CFO challenges a topic the CEO knows it’s because they genuinely mean it, and that they’re trying to protect the business, as opposed to being a blocker or too risk averse.”

The Curse of the Established Company

Businesses that ignore early indicators of disruption are setting themselves up to fail. Hunkering down isn’t the answer either. Leaders must build structures and teams to help them bring external insight into the business and then respond.

Amy Francis, Senior Relationship Manager at Criticaleye, commented: “Strong leadership is crucial to navigate disruption, but that doesn’t mean having to know all the answers yourself.”

It’s important to build structures within your business that will confer agility. Guillaume Bacuvier, CEO of Dunnhumby, explained: “Companies that are large, established and doing well, may struggle to detect disruption, as typically competitors start small and often in a niche. You must be set up to detect and accept potential threats.

“We have a small corporate ventures fund through which we scour the start-up market to look for companies that are operating in our space, or to the side of it, that we think are interesting. This gives us the opportunity to invest, acquire or simply get an early stage feeling about what’s going on,” he said.

Steven Cooper, CEO of private bank C. Hoare & Co, discussed how he is building a senior team that has both the skills to run business-as-usual alongside the capacity to think about disruption. “One of the things I’m doing is creating an Advisory Board. I’ve got three or four people I’m putting together to come and spend some time with me, my management team, the owners of the business and the Board.

“I’ve carefully selected those people: one is the co-founder of a very well-known digital challenger bank; another is an entrepreneur largely in the tech and bio-science industries, so he’s involved in next-generation platforms; the third person has done a lot of work on ESG. I’m asking them to challenge us to think differently, outside of the constraints of normal day-to-day activities and formal Board meetings,” he said.

Combatting the Fear to Challenge

Non-executives tell us that one of the top reasons that management teams fail is due to a fear of challenging and speaking openly. Boardroom culture, human frailty and not knowing how to debate constructively are common root causes.

Jamie Pike, Chair of Spirax-Sarco Engineering and a Board Mentor at Criticaleye, said that businesses need CEOs with the right attributes. “When it comes to some chief execs, by nature you’re selecting big personalities, charisma and a lot of drive. People beneath them will sometimes be overawed; they won't necessarily be frightened, they may just think the boss is brighter, smarter and so assume they'll be right.

“You have to ask if a CEO is trying to get the best out of their people. Ultimately, Boards exist to see that the business has a rational strategy and a team that can implement it effectively. If you feel you have a CEO that’s not the right person to do that, then you need to get someone who is.”

It's important to recognise when debate is being shut down, particularly if you may be guilty of doing this yourself. Tania Howarth, Non-executive Chair of Ozo Innovations, explained: “There’s a danger you can delude yourself as a leader into believing everything is fine, because you’re not getting the challenge and so assume that everyone agrees with you. Or sometimes you just don’t want the debate, as it risks weakening your own and public confidence that the strategy you’re pursuing is right. This is dangerous.”

She advocates welcoming alternative voices. “There are ways of allowing positive challenge to flourish in an organisation; it’s about being open as a leader, recognising and communicating that you value input because you’re not the expert on everything,” she said.

In the face of ongoing and massive disruption, business leaders need to align their top team around an agile strategy and build trust with their stakeholders – including internal ones. Peter Lacy, Senior Managing Director at Accenture Strategy, emphasised the importance of Earning Trust as a CEO.

“Employees need to have faith in CEOs and senior executives during this period of uncertainty. They want to know where they are heading and that steps will be taken to help them reskill and pivot to the new,” he said.

“With the right communication, people can see that they can benefit from new technologies and be at the heart of the revolution we are about to see in areas like AI.”